Document verification use in banks and financial organizations

Document verification

KYC and AML procedure is require for banks and financial institutions. KYC/AML compliance is essential for filtering out bad actors and maintaining an organization’s legitimacy. The US Department of the Treasury has passed legislation that requires financial institutions to assist the government in detecting and preventing money laundering in the financial system.

Furthermore, the Bank Secrecy Act (BSA) compels financial institutions to keep certain client records pertaining to cash transactions and to report suspicious financial activities that appear to be an attempt at money laundering, terrorist funding, tax evasion, or any other illegal conduct. FinCEN (Financial Crimes Enforcement Network) also issued a set of regulations to further strengthen Customer Due Diligence (CDD) practices and Anti-Money Laundering (AML) exercises in financial institutes.
Customer Due Diligence practices involve the identification of customers against documents that are official. Customer verification against these documents such as ID card, passport, and driving license ensures the credibility of a customer. Moreover, online document validation services are available that are integrating with online portals of financial systems to verify each onboarding identity online combatting the risks of online financial frauds and crimes.

Online KYC Process

To clarify CDD requirements and strengthen KYC in the financial sector, FinCEN outlined a minimum of four elements that contribute to an effective approach in conducting identity verification. This scope extends when it comes to online industries as well. Online banking and other financial institutions are facing challenges in verifying the identities online to comply with KYC requirements. Also with the advent of the Fintech industry, the need for online KYC processes has increased. KYC process include

  • Identification and verification of customers’ identity
  • Identification and verification of the identity of the beneficial owners
  • Verification of entities who own and control legal activities
  • Understanding the risk associated with each profile
  • Ongoing monitoring of transactions to identify the suspicious ones

Just the way traditional banks and financial institutions use to verify each onboarding identity against the document, online document verification can also be performing.

How online document verification works?

To meet KYC regulatory requirements, online financial portals are supposing to conduct KYC verification of online customers. For this, an online document verification solution is considered. The onboarding user is supposed to upload the picture of the official identity document as discussed above. From the document, all identity-related information is extracted using Optical Character Recognition (OCR). Afterward, face verification is performing online. The user is suppose to take a live picture and upload it. The image of the real-time capture is comparing to the one on the document. If both matches, the identification of the person is confirm.

Future of Finance Technology

Many financial institutions are using the online document verification process which helps identification of the digital identity of online customers using an authenticated government-issued ID document. Once a banking customer’s identity is validating, it is further authenticating against a selfie photo in which liveness detection is using to ensure the physical presence of customers. Combat the fraudulent attempts of online users. Liveness detection is using to identify the spoofing elements and make sure that the image has facial movements. This approach is using to deter the risk of individuals fooling online facial recognition technology while conducting online document verification.

To sum up, online document verification helps online businesses especially the Fintech industry to take in place identity verification services that help them comply with global and local regulatory authorities after ensuring the online KYC process. The seamless onboarding customer experience along with security serves the purpose of efficient online NFC verification.